2014 tax planning tables

2014 tax

planning tables

2014 important deadlines

Last day to … January 15

• Pay fourth-quarter 2013 federal individual estimated income tax January 27

• Buy in to close a short-against-the-box position (regular-way settlement)

March 17

• Establish and fund SEP plans for corporations for 2013 (filing an extension extends the deadline)

• Fund employer contributions for retirement plans for corporations (filing an extension extends the deadline) April 1

• Take 2013 required minimum distribution (RMD) from traditional IRAs if you reached age 701/2 in 2013

April 15

• File 2013 federal individual income tax return (or file an extension)

• Pay first-quarter 2014 federal individual estimated income tax

• Make 2013 contribution to traditional IRA, Roth IRA, or Education Savings Account (ESA)

• Establish and fund SEP plans for sole proprietorships and partnerships for 2013 (filing an extension extends the deadline) June 16

• Pay second-quarter 2014 federal individual estimated income tax September 15

• Pay third-quarter 2014 federal individual estimated income tax October 1

• Establish a SIMPLE IRA/safe harbor 401(k) October 15

• File 2013 federal individual income tax return subject to automatic extensions

• Recharacterize a 2013 Roth IRA conversion November 28

• Double up to avoid violating the “wash sale” rule December 31

• Sell stock or listed options to realize a gain or loss

• Establish a new qualified plan (calendar-year taxpayers)

• Complete gifts for the current calendar year (charitable or other)

• Take 2014 RMDs from traditional IRAs and most qualified plans if you reached age 701/2 before 2014

• Complete a Roth IRA conversion

• Complete a 529 plan contribution

• Sell shares acquired through the 2014 exercise of incentive stock

options (ISOs) in disqualifying disposition to limit alternative

minimum tax (AMT) exposure

2014 income tax rate schedules

Married taxpayer filing jointly/surviving spouse

Taxable income* Tax

Over But not over Pay + % on

excess Of the amount over

$ 0 $ 18,150 $ 0.00 10% $ 0

$ 18,150 $ 73,800 $ 1,815.00 15% $ 18,150 $ 73,800 $ 148,850 $ 10,162.50 25% $ 73,800 $ 148,850 $ 226,850 $ 28,925.00 28% $ 148,850 $ 226,850 $ 405,100 $ 50,765.00 33% $ 226,850 $ 405,100 $ 457,600 $ 109,587.50 35% $ 405,100 $ 457,600 – $ 127,962.50 39.6% $ 457,600 Single taxpayer

Taxable income* Tax

Over But not over Pay + % on

excess Of the amount over

$ 0 $ 9,075 $ 0.00 10% $ 0

$ 9,075 $ 36,900 $ 907.50 15% $ 9,075 $ 36,900 $ 89,350 $ 5,081.25 25% $ 36,900 $ 89,350 $ 186,350 $ 18,193.75 28% $ 89,350 $ 186,350 $ 405,100 $ 45,353.75 33% $ 186,350 $ 405,100 $ 406,750 $ 117,541.25 35% $ 405,100 $ 406,750 – $ 118,118.75 39.6% $ 406,750 Head of household

Taxable income* Tax

Over But not over Pay + % on

excess Of the amount over

$ 0 $ 12,950 $ 0.00 10% $ 0

$ 12,950 $ 49,400 $ 1,295.00 15% $ 12,950 $ 49,400 $ 127,550 $ 6,762.50 25% $ 49,400 $ 127,550 $ 206,600 $ 26,300.00 28% $ 127,550 $ 206,600 $ 405,100 $ 48,434.00 33% $ 206,600 $ 405,100 $ 432,200 $ 113,939.00 35% $ 405,100 $ 432,200 – $ 123,424.00 39.6% $ 432,200 Married taxpayer filing separately

Taxable income* Tax

Over But not over Pay + % on

excess Of the amount over

$ 0 $ 9,075 $ 0.00 10% $ 0

$ 9,075 $ 36,900 $ 907.50 15% $ 9,075

$ 36,900 $ 74,425 $ 5,081.25 25% $ 36,900

$ 74,425 $ 113,425 $ 14,462.50 28% $ 74,425

$ 113,425 $ 202,550 $ 25,382.50 33% $ 113,425

$ 202,550 $ 228,800 $ 54,793.75 35% $ 202,550

Standard deductions

Married/

joint Single Head of

household Dependents Married/

separate

$12,400 $6,200 $9,100 $1,000 $6,200

For dependents with earned income, the deduction is greater of $1,000 or earned income +$350 of unearned income (up to $6,200).

Additional standard deductions

Married, age 65 or older or blind $ 1,200*

Married, age 65 or older and blind $ 2,400*

Single, age 65 or older or blind $ 1,550 Single, age 65 or older and blind $ 3,100

* per person

Personal and dependency exemption: $3,950 Personal and dependency exemption phaseouts

Phaseouts Exemption reduced

when AGI exceeds Exemption phased out when AGI

exceeds

Married/joint ^{$305,050 $427,550}

Single $254,200 $376,700

Head of

household ^{$279,650 $402,150}

Married/separate $152,525 $213,775

Itemized deduction phaseouts

Phaseouts Deduction reduced when AGI exceeds*

Married/joint $305,050

Single $254,200

Head of household $279,650

Married/separate $152,525

* Itemized deductions will be trimmed by 3% of the amount by which your AGI exceeds these thresholds. However, the amount of your itemized deductions will never be reduced by more than 80%.

Tax credit for dependent children

Modified adjusted gross income

(MAGI)

Tax credit for each child younger than

age 17 Married/joint $0 - 110,000 $1,000

Individual $0 - 75,000 $1,000

Tax credit is reduced by $50 for each $1,000 by which the taxpayer’s MAGI exceeds the

maximum threshold.

Capital gains and losses and dividends

10% and 15%

tax bracket

25% up to 35% tax brackets

39.6% tax bracket Short-term

(one year or less) Ordinary rate Ordinary

rate Ordinary rate Long-term

(longer than one year) 0%* 15%* 20%

Dividends Qualified dividends are taxed at the long- term capital gain rates; nonqualified dividends are taxed at ordinary income tax rates.

* To the extent taxable income remains in these brackets. Consult your tax advisor about how this applies to your situation.

Netting capital gains and losses 1. Net short-term gains and short-term losses.

2. Net long-term gains and long-term losses.

3. Net short-term against long-term.

4. Deduct up to $3,000 of excess losses against ordinary income per year.

5. Carry over any remaining losses to future tax years.

Alternative minimum tax (AMT)

Tax brackets

AMT income Tax

Up to $182,500* 26%

Over $182,500 28%

* $91,250 if married filing separately

AMT exemption

Exemption Phased out on excess over Married filing joint

and surviving spouse ^{$ 82,100 $ 156,500} Unmarried individual $ 52,800 $ 117,300 Married filing

separately ^{$ 41,050 $ 78,250}

Estates and trusts $ 23,500 $ 78,250

Education Savings Accounts (ESA)

• Maximum nondeductible contribution is $2,000 per child, per year.

• Must be established for the benefit of a child younger than the age of 18.

• Maximum contribution amount is lowered if a

contributor’s modified adjusted gross income (MAGI) is between:

- $95,000 and $110,000 for individual filers - $190,000 and $220,000 for joint filers

• No contributions can be made if contributor’s MAGI exceeds the stated limits or the beneficiary is age 18 or older.

• Interest, dividends, and capital gains grow tax deferred and may be distributed federal-income-tax free as long as the money is used to pay qualified education expenses.

529 plans

• Earnings accumulate tax-deferred; qualified withdrawals may be federal-income-tax-free.

• No income, state-residency, or age restrictions.

• Potential state-tax incentives available in some states.

• Contributions up to $70,000 (single) and $140,000 (married couples) allowed in one year without a reduction in the applicable gift/estate tax exclusion (see page 11). No additional gifting in the current year or next four years without incurring potential gift tax implications.

Please consider the investment objectives, risk, charges, and expenses carefully before investing in a 529 savings plan. The official statement, which contains this and other information, can be obtained by calling your Financial Advisor. Read it carefully before you invest.

American Opportunity Credit

Maximum credit $2,500 per student for first four years of qualified expenses paid MAGI phase-outs:

Married filing jointly $160,000 - $180,000

Single filer $80,000 - $90,000

Lifetime Learning Credit

Maximum credit 20% of first $10,000 (per tax return) of qualified expenses paid in 2014

MAGI phase-outs:

Married filing jointly $108,000 - $128,000

Single filer $54,000 - $64,000

Education planning

* Total yearly costs for in-state tuition, fees, books, and room and board (transportation and miscellaneous expenses not included). Base is 2013-2014 school year. Costs for all future years projected by Wells Fargo Advisors in November 2013 assuming a 2.9% national average increase per year for public and a 3.8% national average increase per year for private.

Source: Trends in College Pricing. ©2013 collegeboard.com, Inc. Reprinted with permission.

All rights reserved. collegeboard.com

Estimated annual college costs

Public* Private*

2014 $19,598 $42,170

2019 $22,609 $50,814

2024 $26,083 $61,231

2029 $30,091 $73,784

Exclusion of U.S. Savings Bond interest

MAGI phase-outs:

Married filing jointly $113,950 - $143,950

Others $76,000 - $91,000

Bonds must be titled in name(s) of taxpayer(s) only. Owner must be age 24 or older at time of issue. Must be Series EE issued after 1989 or any Series I bonds. Proceeds must be used for qualified postsecondary education expenses of the taxpayer, spouse, or dependent.

Student loan interest deduction

Maximum deduction $2,500

MAGI phase-outs:

Married filing jointly $130,000 - $160,000

Others $65,000 - $80,000

Kiddie tax

Children who have not reached the age of 19 by the end of the tax year are subject to the “kiddie tax” rules. If the child continues to be a full-time student, the rules apply until he or she turns age 24. The following tax rate schedule will apply (assumes no earned income).

Unearned income Tax treatment Less than $1,000 No tax

$1,000 - $2,000 Taxed at child’s rate

More than $2,000 Taxed at the higher of the parents’ top marginal

rate or the child’s tax rate

Pretax 401(k), 403(b), 457, Roth 401(k), or 403(b)

Employee maximum

deferral contributions Catch-up contribution (if age 50 or older)

$17,500 $5,500

Combined limit for Roth 401(k) or Roth 403(b) and pretax traditional 401(k) or pretax 403(b) deferral contributions is $17,500 for those younger than 50.

Traditional and Roth IRA

Maximum contribution Catch-up contribution (if age 50 or older)

$5,500 $1,000

2014 contributions must be made no later than the tax-filing deadline (April 15, 2015), regardless of tax extensions. Traditional IRA contributions cannot be made for the year the owner turns age 70½ or subsequent years.

Traditional IRA deductibility limits

If neither individual nor spouse is a participant in another plan:

$5,500* maximum deduction

If the individual is an active participant in another plan:

Married/joint MAGI

Single MAGI

Deduction Up to $96,000 Up to $60,000 $5,500

$96,000 - $116,000 $60,000 - $70,000 Phased out

$116,000 and over $70,000 and over $0

* If a spouse (working or nonworking) is not covered by a retirement plan but his or her spouse is covered, the spouse who is not covered is allowed full deductibility up to $181,000 joint MAGI, phased out at $191,000 joint MAGI.

†

Modified adjusted gross income

‡

Maximum deduction is $6,500 if age 50 or older.

Note: Phaseout for married filing separately is $0 - $10,000.

Roth IRA qualifications

• Contribution amount is limited if modified adjusted gross income (MAGI) is between:

– $114,000 and $129,000 for individual returns*

– $181,000 and $191,000 for married/joint filers – $0 and $10,000 for married filing separate

• Cannot contribute if MAGI exceeds limits.

• Contributions are taxable.

• Contributions are allowed after the age of 701/2 if made from earned income.

* Includes single filers, head of household, and married filing separately if you did not live with your spouse at any time during the year.

Retirement accounts

Retirement plan limits

Maximum elective deferral to SIMPLE IRA and

SIMPLE 401(k) plans $ 12,000

Catch-up contribution for SIMPLE IRA and

SIMPLE 401(k) plans (if age 50 or older) $ 2,500 Maximum annual defined contribution plan limit $ 52,000 Maximum compensation for calculating

qualified plan contributions $ 260,000

Maximum annual defined benefit limit $ 210,000 Threshold for highly compensated employee $ 115,000 Threshold for key employee in top-heavy plans $ 170,000 Maximum SEP contribution is lesser of limit or

25% of eligible income $ 52,000

Age Life

Expectancy Factor

70 27.4

71 26.5

72 25.6

73 24.7

74 23.8

75 22.9

76 22.0

77 21.2

78 20.3

79 19.5

80 18.7

81 17.9

82 17.1

83 16.3

84 15.5

85 14.8

86 14.1

87 13.4

Uniform Lifetime/Minimum Distribution Table

Age Life

Expectancy Factor

88 12.7

89 12.0

90 11.4

91 10.8

92 10.2

93 9.6

94 9.1

95 8.6

96 8.1

97 7.6

98 7.1

99 6.7

100 6.3

101 5.9

102 5.5

103 5.2

104 4.9

105 4.5

Earnings test

The earnings test indicates the level of earnings permissible for Social Security benefits recipients without incurring a deduction from benefits. These limits are indexed to increases in national earnings.

Worker younger than full retirement age ^$15,480 Year worker reaches full retirement age

(applies only to earnings for months prior to

attaining full retirement age) $41,400

Worker at full retirement age ^{No limit}

Maximum monthly benefit: $2,642

This benefit is for an individual who reaches full retirement age in 2014 and earns at least the maximum wage base amount for the best 35 years.

Information provided by the Social Security Administration.

Taxation thresholds

Up to a certain percentage of an individual’s Social Security benefits is subject to taxation when his or her provisional income* exceeds certain threshold amounts:

Up to 50% taxed Up to 85% taxed Married/joint $32,000 - 44,000 More than $44,000 Single $25,000 - 34,000 More than $34,000 Married filing

separately 85% taxable

* Provisional income generally includes modified adjusted gross income (MAGI) plus nontaxable interest and one-half of Social Security benefits.

† There is an exception to this rule if you lived apart from your spouse for the entire year. Consult your tax advisor for more information.

Social Security tax rates

Maximum wage base for Social Security $117,000

Employee 6.20%

Employer 6.20%

Self-employed 12.40%

Social Security benefits

Medicare tax rates

Thresholds

Single $200,000

Married/joint ^$250,000 Married/separate $125,000 Trust/estate ^$12,150

Below threshold Above threshold Tax rate on employee compensation

Compare thresholds to Medicare wages as reported on IRS Form W-2

Employee’s tax rate 1.45% 2.35%

Employer’s tax rate 1.45% 1.45%

Tax rate on self-employment income

Compare threshold to net self-employment income as determined on IRS Form 1040 Schedule SE

Owner’s rate 2.90% 3.80%

Tax rate on net investment income Compare threshold to MAGI

Investor’s tax rate 0.00% 3.80%

Health and long-term care

Long-term care deduction for medical care*

Age attained before the close of the

taxable year Limit on premiums

40 or less $ 370

More than 40 but not more than 50 $ 700 More than 50 but not more than 60 $ 1,400 More than 60 but not more than 70 $ 3,720

More than 70 $ 4,660

* Limitations apply based on type of taxpayer. You should consult your tax advisor regarding your situation.

Health Savings Account (HSA) limits

Maximum contribution Single Family

$3,300 $6,550

$1,000 catch-up contribution allowed per individual age 55 or older Minimum health insurance plan deductible

Single Family

$1,250 $2,500

Maximum out-of-pocket expenses Single Family

$6,350 $12,700

Federal trust and estate income tax

Tax rates

Taxable income Tax

More than But not

more than Pay + % on excess

Of the amount more

than

$ 0 $ 2,500 $ 0.00 15% $ 0

$ 2,500 $ 5,800 $ 375.00 25% $ 2,500 $ 5,800 $ 8,900 $ 1,200.00 28% $ 5,800 $ 8,900 $ 12,150 $ 2,068.00 33% $ 8,900

$ 12,150 $ 3,140.50 39.6% $ 12,150

Estate, gift, and generation- skipping transfer tax

Gift tax annual exclusion

$14,000

An individual can give up to $14,000 per person per year to any number of beneficiaries (family or nonfamily) without paying gift tax or “using up” any available applicable exclusion amount.

Estate and gift tax - basic exclusion

$5,340,000

Estate or gift taxes apply to the extent that your cumulative transfers (lifetime exclusion gifts plus the taxable estate at death) exceed your applicable exclusion.

Your applicable exclusion consists of your $5,340,000 basic exclusion plus any “unused” exclusion received from a spouse who predeceased you.

Exclusion “portability”: A deceased spouse’s unused exclusion can only be transferred if (1) the spouse died after December 31, 2010, and (2) the deceased spouse’s executor made an election to transfer any unused exclusion to the surviving spouse by filing a timely estate tax return.

Generation-skipping transfer (GST) tax exemption

$5,340,000

Estate, gift, and GST tax rate 40%

Applies to transfers in excess of the applicable exclusion/

GST exemption.

Corporate income tax

Tax rates

Taxable income Tax

Over But not over Pay + % on

excess Of the amount over

$ 0 $ 50,000 $ 0 15% $ 0

$ 50,000 $ 75,000 $ 7,500 25% $ 50,000 $ 75,000 $ 100,000 $ 13,750 34% $ 75,000 $ 100,000 $ 335,000 $ 22,250 39% $ 100,000 $ 335,000 $ 10,000,000 $ 113,900 34% $ 335,000 $ 10,000,000 $ 15,000,000 $ 3,400,000 35% $ 10,000,000 $ 15,000,000 $ 18,333,333 $ 5,150,000 38% $ 15,000,000 $ 18,333,333 $ 6,416,667 35% $ 18,333,333 Note: There are no special federal capital gains rates for corporations. For corporations, capital losses are deductible only against capital gains. Corporations pay alternative minimum tax (AMT) at a 20% rate.

Stay abreast of pending tax legislation and keep in touch with your Financial Advisor.

Wells Fargo Advisors suggested spending guidelines

Mortgage payments Not to exceed 28% of gross (pretax) income

Discretionary expenses (clothing, entertainment, restaurants, etc.)

Not to exceed 20% of after-tax income Auto loans and credit

card debt Not to exceed 20% of after-tax income

Combined monthly debt Not to exceed 36% of monthly

gross (pretax) income

Tax-free yield (%)

2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0%

bracket Tax Taxable-equivalent yield (%)

10% 2.2 2.8 3.3 3.9 4.4 5.0 5.6 6.1 6.7

15% 2.4 2.9 3.5 4.1 4.7 5.3 5.9 6.5 7.1

25% 2.7 3.3 4.0 4.7 5.3 6.0 6.7 7.3 8.0

28% 2.8 3.5 4.2 4.9 5.6 6.3 6.9 7.6 8.3

33% 3.0 3.7 4.5 5.2 6.0 6.7 7.5 8.2 9.0

35% 3.1 3.8 4.6 5.4 6.2 6.9 7.7 8.5 9.2

39.6% 3.3 4.1 5.0 5.8 6.6 7.5 8.3 9.1 9.9

Municipal bond taxable- equivalent yields

Based on various federal income tax brackets (does not account for state taxes)

Example: A taxpayer in the 28% federal income tax bracket would have to purchase a taxable

investment yielding more than 6.9% to outperform a 5% tax-free investment.

Values shown are based on investments made at the beginning of each month, compounded monthly, and do not reflect the return of any particular investment. These tables are for illustrative purposes only and do not reflect the effects of taxes or transaction costs.

Compounding

At hypothetical rates of return 4%

Monthly

investment 5 years 10

years 20

years 30 years $ 50 Amount

invested Value ^{$ 3,000} $ 3,326

$ 6,000 $ 7,387

$ 12,000 $ 18,400

$ 18,000 $ 34,818 $ 100 Amount

invested Value ^{$ 6,000} $ 6,652

$ 12,000 $ 14,774

$ 24,000 $ 36,800

$ 36,000 $ 69,636 $ 500 Amount

invested Value ^{$ 30,000} $ 33,260

$ 60,000 $ 73,870

$ 120,000 $ 183,998

$ 180,000 $ 348,181 $ 1,000 Amount

invested Value ^{$ 60,000} $ 66,520

$ 120,000 $ 147,741

$ 240,000 $ 367,997

$ 360,000 $ 696,363 Monthly 6%

investment 5 years 10

years 20 years 30

years $ 50 Amount

invested Value ^{$ 3,000} $ 3,506

$ 6,000 $ 8,235

$ 12,000 $ 23,218

$ 18,000 $ 50,477 $ 100 Amount

invested Value ^{$ 6,000} $ 7,012

$ 12,000 $ 16,470

$ 24,000 $ 46,435

$ 36,000 $ 100,954 $ 500 Amount

invested Value ^{$ 30,000} $ 35,059

$ 60,000 $ 82,349

$ 120,000 $ 232,176

$ 180,000 $ 504,769 $ 1,000 Amount

invested Value ^{$ 60,000} $ 70,119

$ 120,000 $ 164,699

$ 240,000 $ 464,351

$ 360,000 $ 1,009,538

8%

Monthly

investment 5 years 10

years 20 years 30

years $ 50 Amount

invested Value ^{$ 3,000} $ 3,698

$ 6,000 $ 9,208

$ 12,000 $ 29,647

$ 18,000 $ 75,015 $ 100 Amount

invested Value ^{$ 6,000} $ 7,397

$ 12,000 $ 18,417

$ 24,000 $ 59,295

$ 36,000 $ 150,030 $ 500 Amount

invested Value ^{$ 30,000} $ 36,983

$ 60,000 $ 92,083

$ 120,000 $ 296,474

$ 180,000 $ 750,148 $ 1,000 Amount

invested Value ^{$ 60,000} $ 73,967

$ 120,000 $ 184,166

$ 240,000 $ 592,947

$ 360,000

$ 1,500,295

© 2013 Wells Fargo Advisors All rights reserved.

Wells Fargo Advisors does not render legal or tax advice.

While this reference guide is not intended to replace your discussions with your appointed tax advisor, it may help you comprehend the tax implications of your investments and plan tax efficiently.

Wells Fargo Advisors is the trade name used by two separate registered broker-dealers: Wells Fargo Advisors, LLC and Wells Fargo Advisors Financial Network, LLC, Members SIPC, non-bank affiliates of Wells Fargo & Company.

NOT FDIC Insured NO Bank Guarantee MAY Lose Value Investment and Insurance Products:

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925 93-v1